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Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said his disagreement over Fed policy -- which aims to reduce its $4.4 trillion balance sheet without selling mortgage-backed securities -- is based on his opposition to the central bank's purchase of the securities. He said the policy favors home-mortgage borrowers at the expense of other consumer borrowing.

The Federal Reserve Bank of New York today will sell $1.5 billion worth of mortgage-backed bonds it bought from American International Group. The Fed's sale spurred a flurry of activity in the subprime-mortgage market and banks, hedge funds and other bond holders attempt to learn more about the state of the market. Some companies are circulating "bid lists" of residential mortgage-backed securities.

The Federal Reserve Bank of New York today will sell $1.5 billion worth of mortgage-backed bonds it bought from American International Group. The Fed's
action has sparked a flurry of activity in the subprime-mortgage market as banks, hedge funds and other bond holders closely watch the sale as an indicator of the value of their own holdings. Some companies are circulating "bid lists" of residential mortgage-backed securities.

The Federal Reserve's balance sheet reached $2.192 trillion this week, up from $2.117 trillion the previous week. The rise is because of an increase in holdings of agency and mortgage-backed securities, according to Fed data. The central bank's financing programs, aimed at helping the financial system as well as the broader economy, have caused its balance sheet to more than double.

The Federal Reserve's balance sheet reached $2.192 trillion this week, up from $2.117 trillion the previous week. The rise is because of an increase in holdings of agency and mortgage-backed securities, according to Fed data. The central bank's financing programs, aimed at helping the financial system as well as the broader economy, caused its balance sheet to more than double.